Copy of Listing of Securities New

8/8/2019 Copy of Listing of Securities New

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Listing of SecuritiesListing of Securities

Presented By: NAMRTAM.com(e.com)3rd sem



C ontents

y Listing of securities: Meaningy C entral Listing Authority ( C LA)y Principal Objectivesy Advantagesy Is it¶s a Legal Requirement?y C onsequences of Non-Listingy

Obligations on Listed companiesy Pre-requisites for Qualifying for Listingy New Entry Norms for Unlisted C ompaniesy Documents to be Submitted for Listingy Listing Abroad



Listing of securities

A security is said to be µlisted¶ when itsname is added to the list of securities in

which trading on a particular exchange is permitted.

Listing means admission of securities to dealingson a recognized stock exchange. The securitiesmay be of any public limited company, C entralor State Government, quasi governmental andother financial institutions/corporations,

municipalities, etc.



C LA: C entral Listing Authority

C LA is being set up with representatives of regional stock exchanges.

It has two primary roles

It also has the responsibility to update the

listing normsSEBI has also been working out new listingmodalities



Principal Objectives of Listing



Advantages of Listing



Listing: Is It A Legal Requirement?

According to section 73 of the C ompaniesAct, 1956

There is no statutory obligationUnless a public limited company:y It seeks to raise funds from public by

issue of prospectus,y A company declaring in the prospectus its

intention of applying for enlistment.



C ont.

Further the govt. also has the power under section 21 of Securities C ontracts

(Regulation) Act,1956, to compel a publiclimited company, when it is so necessary or expedient in the interest of the trade.

Similarly, public financial institutions and Nationalized Banks make similar stipulations when agreeing to underwrite or subscribe to a new issue of capital.



C onsequences of Non-listing

Are:y Any allotment of shares or debentures on an

application shall be void;y Any application money collected is to be

refunded without interest, within eight days;y After expiry of aforesaid eighth day, the

company and its every director shall beliable to repay the amount with interest at

prescribed rate.



Obligations on Listed C ompanies

The obligations on companies which havegot their shares and debentures listed in

recognized stock exchanges are:y Subject themselves to various regulatory

measures of SEBI and stock exchanges;y Submit required books, documents and papers and disclose any other informationwhich stock exchanges asks for;



C ont.

y Send to all shareholders the notices of Annual General Meetings, Annual

Reports, etc.; andy Place its securities with the public.



Pre-requisites for Qualifying for

ListingThe minimum essential requirements which a

company has to comply are:

a) Minimum Issued Capital and Minimum Public Offer .The minimum issued capital of the company must beof Rs. 3crores of which at least Rs. 1.80crores in facevalue must be offered to the general public.

b) Minimum Number of Shareholders. There must be atleast five public shareholders for every Rs. 1lakh of fresh public issue of capital and ten publicshareholders for every Rs. 1lakh of offer for sale of existing capital. The rules are different in case of

investment companies.



Pre-requisites for Qualifying for

Listing (C

ont.)c) Payment of interest on Excess Application Money.

The companies are obliged to pay interest on excessapplication money at the rates ranging from 4% to 15%depending on the delay beyond 10weeks from the dateof closure of subscription list.

d) Listing on More Than One Exchange and on Regional Exchanges. Every company with paid-up capital of

more than Rs. 5crores has to get itself listed on morethan one stock exchange, including compulsory listingon regional stock exchange.



Pre-requisites for Qualifying for Listing ( C ont.)e) Compulsory Provisions in Articles of Association. A

company applying for listing must satisfy the stock exchange that in addition to other matters, its Articles of Association provide for the following:

i. That the company shall use a common form of transfer,

ii. That the fully paid shares will be free from lien,

iii. In case of partly paid shares, the company¶s lien, if any, will be restrictedto money called or payable at a fixed time in respect of such shares,

iv. That any amount paid-up in advance of calls on any share may carryinterest but shall not entitle the holder of the share to participate inrespect thereof, in a dividend subsequently declared

v. There will be no forfeiture of unclaimed dividends before the claims become barred by law, and

vi. that option or right to call of shares shall not be given to any person

except with the sanction of the company in general meeting.



Pre-requisites for Qualifying for Listing ( C ont.)

f) Minimum Public Offer for Subscription. At least 25% of each class or kind of securities issued by the companyis to be offered to the public for subscription throughadvertisement in newspapers for a period of not lessthan two days and that applications received in

pursuance of such offer and to be allotted fairly andunconditionally.

g) Cost of Public Issue of capital. The new companieswill be considered for listing of old companies willcontinue only if they adhere to the ceiling inexpenditure of public issues.



Pre-requisites for Qualifying for Listing ( C ont.)h) Undertaking regarding Restriction on Transfer of

Shares from Promoters Quota. The auditors/practisingcompany secretary of the company applying for listing

(other than specified institution) have to specify that theshare certificates have been stamped so that shares from promoter¶s quota cannot be sold/hypothecated/transferred for a period of three years.

i) Corporate Governance must for Listing. Newcompanies applying for listing have to enter into anagreement with stock exchange undertaking to complywith corporate governance rules. All companies alreadylisted on the stock exchanges will have to adhere to the

new code if they want to remain listed on exchanges.



New Entry Norms for UnlistedC ompaniesThe SEBI approved the draft compendium of SEBI¶s DIP

Guidelines on August 12, 1997 which lays down thefollowing entry norms for unlisted companies:

1. Unlisted companies should have paid dividend inimmediately preceding 3 years before public issue.This condition further tightens the entry norm for companies going public since earlier the normsstipulated payment of dividend in al least 3 out of the

preceding 5 years.2. Any unlisted company can freely price its securities

provided it has shown net profits in the immediately preceding 3 years subject to its fulfilling the existing

disclosure requirements.



New Entry Norms for UnlistedC ompanies( C ont.)

3. A listed company would be required to meet the entrynorms only if the post-issue net worth becomes morethan 5times the pre-issue net worth.

4. C ompanies would be required to make their partly paid-shares fully paid-up or forfeit the same, beforemaking a public/rights issue.

5. Prior to these modifications, promoters¶ contribution

for public issues by unlisted as well as listed companieswas specified as 25% for issue size up to Rs. 100croreand 20% for issue size above Rs. 100crore. The

promoters contribution has now been made uniform at20% irrespective of the issue size.



New Entry Norms for UnlistedC ompanies( C ont.)

6. Only such securities can be offered for promoterscontribution for which a specific written consent has

been obtained from the shareholders.7. Appointment of a µRegistrar to an Issue¶ for rights issue

is now mandatory.8. A provision has been made regarding disclosure of the

shareholding of the promoters whose name figure in the

paragraph on µpromoters and their background¶.



Documents to be Submitted for ListingFollowing documents and particulars along with the

application:a) Memorandum and Articles of Association and, in the

case of a debenture issue, a copy of the trust deed. b) C opies of all prospectuses or statements in lieu of

prospectuses issued by the company at any time.c) C opies of offers for sale and circulars or

advertisement offering any securities for subscriptionor sale during the last five years.

d) C opies of balance sheets and audited accounts for thelast five years, or in the case of new companies, for such shorter period for which accounts have beenmade up.





Documents to be Submitted for Listing( C ont.)g) C ertified copies of agreements with-

(i) managing agents and secretaries and treasurers,

(ii) selling agents,

(iii) managing directors and technical directors, and(iv) general manager, sales manager, manager or secretary.

h) C ertified copy of every letter, report, balance sheet,valuation contract, court order or other document, part

of which is reproduced or referred to in any prospectus,offer for sale, circular or advertisement offeringsecurities for subscription or sale, during the last fiveyears.



Documents to be Submitted for Listing( C ont.)i) A statement containing particulars of the dates of, and

parties to all material contracts, agreements(including agreements for technical advice and

collaboration), concessions and similar other documents (except those entered into in the ordinarycourse of business carried on or intended to be carriedon by the company) together with a brief descriptionof the terms, subject-matter and general nature of the

documents. j) A brief history of the company since its corporation,

giving details of amalgamation, changes in its capitalstructure and debenture borrowings, if any.



Documents to be Submitted for Listing( C ont.)

k) Particulars of shares and debentures issued-i. For consideration other than cash, whether in whole or part,

ii. At a premium or discount, or

iii. In pursuance of an option.

l) A statement containing particulars of any commission, brokerage, discount or other special terms includingan option for the issue of any kind of the securities

granted to any person.m) Particulars of shares or debentures for which

permission to deal is applied for.n) Particulars of shares forfeited.



Documents to be Submitted for Listing( C ont.)

o) C ertified copies of-i. Letter of consent of the CC I (now not required because the

office of CC I has been abolished ); and

ii. Agreements, if any, with the Industrial Finance C orporation,Industrial C redit and Investment C orporation and similar

bodies.

Provided that a recognized stock exchange may, either generally by its bye-laws or in any particular case,call for such further particulars or documents as itdeems proper.



Listing Abroad - ADR/GDR NormsEased

The govt. amended in August 2005 the ADR/GDR normsto allow companies to go for simultaneous listing of their shares.

The foreign offer can also be made within 30days of thedomestic listing

The companies have to take SEBI¶s approval for the percentage of the paid-up capital to be offered in the

domestic and ADR/GDR markets.



Tha nk You



?



Bibliography



y http://www.legalserviceindia.com/article/l329-Listing-&-Delisting-Of-

Securities.html

y http://www.docstoc.com/docs/12163414/

LISTING-OF-SE C URITIES